Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill

Members, we now come to the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill, Part 1. This is the debate on clauses 3 to 23, and Schedule 1, amendment to Unit Titles Act 2010. The question is that Part 1 stand part.

I seek leave for all provisions to be taken as one question.

Leave has been requested for all provisions to be taken as one provision. Is there any objection? There is no objection.

This is a bill that is a member’s bill that has benefited greatly from an extensive and collaborative select committee process. I want to acknowledge the contribution of officials and members across the House who have sought to make this bill better during the select committee process.

On the Table we have a Supplementary Order Paper (SOP) from the Minister which outlines a number of changes designed to make this bill work in practice for those living in unit title dwellings, for those who wish to purchase them in the future, and for those operating bodies corporate. National members will be supporting the Minister’s SOP 144 as we believe that the amendments make the bill more workable in practice.

We remain of the view that there are some things that could be done to strengthen this bill further and to make it more operable, and I want to in this call just outline two of those, both of which are covered by SOPs in the name of National’s housing spokesperson, Chris Bishop. The first relates to disclosure requirements.

During the select committee process, there were a number of concerns raised by submitters about how disclosure would work with the changes that had been put forward in the bill. I think the intent of everyone is to ensure that when someone goes to purchase a property, they can get good, transparent information about any problems that that building may have had or any defects, that they have awareness of that before they put in an offer, and that they can have confidence that if there are problems with the building, then they will get that information up front. I believe that the changes that the select committee has made in this regard will ensure that that process both works for potential purchasers but also isn’t overly bureaucratic and burdensome for those in the sale process.

There was some debate and discussion about the issue of remediation reports. Now, those reports are prepared by a building professional that reviews and reports on investigations of any defects within the unit title development. Now, there was some advice that it would be expected that remediation reports would by default be included in any pre-disclosure requirement. There has been a lot of discussion about the need for defects to specifically be brought to potential purchasers’ attention, and so SOP 149 in Chris Bishop’s name just makes that clear. It’s a belt and braces approach to specify that remediation reports that have been commissioned in the past three years by the body corporate be as of right available to a potential purchaser, and I commend that SOP to the committee.

The second outstanding issue where National members have come to a view that this bill could be better is that of proxy voting. Now, in the initial member’s bill which I had brought to the House, we sought to limit proxy voting, and there were some good arguments raised by both submitters and officials about why we should be careful not to limit proxy voting too far so as to disrupt quorum of committee or make it difficult for business to occur. So what Chris Bishop has put forward in an SOP is a bit of a compromise, because we still believe—and I want to acknowledge all those stakeholders who have come to me with their stories—that proxy voting can be misused and can undermine the democratic management of bodies corporate.

So SOP 147 sets out that proxies can still act as proxies for a single eligible voter who owns multiple units, regardless of the number of units in the unit title development—so to make clear that that is the case—and it also makes clear that if eligible voters actually give a direction for how they want their vote to be cast, then that doesn’t count towards a proxy cap. It then also proposes that the proxy cap be kept to more than 10 percent of the total principal units, whereas in the original member’s bill that cap was at 5 percent, and, again, more than two principal units where there are 20, rather than one, as it was in the original bill. So I speak to that SOP because I want to encourage members around the House to support it as a workable compromise that would meet the concerns of those who have seen abuses of proxy voting, while also not going too far.

Again, I thank officials and all those involved in the select committee process for getting this bill to where it is today, and I acknowledge the Minister’s SOP.

The question is that Parts 1 and 2, Schedules 1 to 3, and clauses 1 and 2 stand part.

Mr Chair, I just want to acknowledge the member Nicola Willis, who’s just resumed her seat. The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill has been a bill that has gone through the Social Services and Community Committee and actually had a number of extensions applied to it. I’ve been privy to extensive correspondence between the member Nicola Willis and the Minister the Hon Poto Williams—there has been a huge amount of work. I also want to acknowledge the officials for their going through extensive and very detailed—and oftentimes contradictory—submissions from certain submitters.

I think it is really important that I continue to bang the drum of the three key issues that I raised at select committee, which will come as no surprise to members on both sides of the House. In fact, they were raised as recently as last night with both the member in charge, Nicola Willis, and the Minister’s office. Those three key issues, as put forward in the select committee report—in what we used to call the “Minority view”, but I believe is now called a “Differing view” of the Green Party of Aotearoa—centred around, firstly, proxies; secondly, the disclosure regime; and thirdly, around the potential for professionalisation of body corporate managers.

Mr Chair, you’ll see that there are two Supplementary Order Papers (SOPs) on the table related to proxies, and I want to acknowledge the fact that the member in charge, Nicola Willis, originally drafted this SOP that is now in the name of Chris Bishop. It is somewhat more nuanced than the one as put forward by myself. But none the less, we will continue to progress with that, I think really importantly, to make the points that this is something that is necessary for there to be some form of limitation on.

To that effect, we’ve heard and we saw reflected in the select committee report, and we’ve heard from the Labour Party in particular, that they believe that e-voting resolves the issue of potential for proxy votes to be abused. However, I would raise the argument—as put to me, and also in personal experience—that there is, in fact, no consistency with the way that online meetings of bodies corporate currently occur. I can reflect even, actually, on my own recent experience, in my own body corporate, where we held a hybrid meeting—those of us who were joining from a distance, doing so via a kind of Zoom link, and those who were in the room couldn’t hear each other. These are the kinds of teething problems that we are going to experience as we implement things like this e-voting.

I’d also like to raise that there is still a profound problem in the inconsistency and the power imbalance when it comes to access to information for access to those proxies. This is something which many constituents have raised with me, because it is the case that those who currently sit on the body corporate have access to that information of who owns those titles within those apartment blocks, whereas those who may perhaps be seeking to put forward a different proposal than the incumbents on the body corporate do not have access to that information, and therefore are not able to drum up the same level of support that those who have that incumbency bias do. To that extent, it is still an issue that there needs to be some form of proxy limit. So to that effect, the Greens are putting forward our own SOP, but we of course will also be supporting the elegant solution as proposed by the member in charge.

Secondly, with regard to disclosure regimes, I want to acknowledge the Minister and her officials’ work on putting forward a quite comprehensive SOP. But in engaging with stakeholders in here, I particularly want to acknowledge Tim Jones from the Body Corporate Chairs’ Group; and also the City Centre Residents’ Group (CCRG), who have done a huge amount of work in working through these SOPs as put forward. There are still substantive issues that they are identifying with the feasibility and workability of that disclosure regime, and some potential headaches for lawyers further down the track. This is something which we don’t want to see occur, so it is unfortunate that it appears as though the Government’s SOP, only in periphery, addresses some of these issues and doesn’t, at this point, seem to go to the heart of it.

To that effect, I want to acknowledge the other SOP, in the name of Chris Bishop—which I know that the member Nicola Willis has had a lot to do with—which goes towards that issue of disclosure. To that effect, in speaking with the member last night, the Greens withdrew our SOP on long-term maintenance plans, because we believe that in working towards some kind of congruence, and some kind of compromise, and trying to make it as feasible and workable as possible, that is the best solution moving forward. But none the less, we retain those fears that there are still some unworkable provisions that we had hoped would have been addressed in the Government’s SOP with access to those officials, but, none the less, we continue to push ahead because we cannot let the perfect be the enemy of the better.

I finally just want to speak to the issue of body corporate managers and professionalism, which is my final SOP, Mr Chair, if I may take another call. On the issue of body corporate managers, this is one which I think the Greens and I stand alone on—it is a bit of a hobby horse, I know, for some who are engaged in this sector and know it quite well. So body corporate managers are not currently required to belong to any kind of professional body. This was something which was originally required in the original draft of the bill, as put forward by the Hon Judith Collins and the Hon Nikki Kaye, my forebear in Auckland Central, and as progressed and put forward by the member Nicola Willis. However, it was taken out at the select committee stage, based on the advice of officials, and a number of submissions which spoke to the lack of an identifiable problem presently existing.

To that effect, I’d like to just ask our Parliament to reflect on how frequently it is the case that select committee processes are not only incredibly daunting but also something which is not necessarily particularly accessible to the average Joe. They are therefore quite self-selecting in the people who end up coming forward: those who have the time and obviously the specific interest in the issues that are before our Parliament, and therefore also have these issues on their radar. It is the case that those who are currently engaged and involved in these kinds of conflicts around their body corporate tables, who have come to me as their local MP, have raised that there are still some substantial issues with that lack of consistency in professionalism and standards for body corporate managers—some of whom, I might add, are dealing with budgets that are in excess of millions and millions of dollars. The arguments that we’ve heard around there not being an identifiable problem, and therefore there’s not necessarily something that we have to fix, I would say is the opportunity for us to proactively prevent further problems popping up further down the track.

I’ll just allude to a really similar situation that we saw in this Parliament and through select committees—the Justice Committee in particular—in 2008 when the Justice Committee identified that there was a gap in the updated legislation to the Real Estate Agents Act, whereby property managers should be included. This is back in 2008. We then had the incoming National Government’s Associate Minister of Justice, Nathan Guy, turn around and say, “Don’t worry, guys, this can all be sorted in Tenancy Tribunals, because none of the cases seem to largely be in excess of $15,000. So nothing to see here; don’t worry about it.” Nearly 15 years down the track, we’re now going back and looking to regulate property managers with a report from the Minister’s office, which reflects on the fact that 15 years later, we don’t know if there’s 2,000 or 7,000 property managers in the country. I’d say that there was a relatively analogous situation when it comes to body corporate managers, and the opportunity here to prevent these issues appearing in the future.

I, however, also want to acknowledge the concerns that have been raised by members both from the Labour Party, and from the National Party, who I understand might not necessarily be in support of this being reinstated, their reasons being that there is currently not a high-quality, well-established potential entity for which these body corporate managers could belong. To that extent, I just say that’s a matter of creating that entity and creating those professional standards—again, these things can be done, and they should be done to prevent future issues arising.

So, in summation, I want to acknowledge the member Nicola Willis for the immense amount of work that she’s done, and for being incredibly receptive to my late-night phone calls over the past few months, and the Minister, as well, for keeping me privy to that correspondence. I also think it is really important to acknowledge the dogged work of, particularly, Tim Jones, who has been available for us whenever we’ve needed to check in with him about whether something was feasible or workable, and he in turn tapping in to his networks. Also Noelene, in particular, from CCRG, who I have had on the blower as recently as yesterday too, just double-checking that these are really important things that we should continue to press. Because, at the very least, if we cannot make these improvements right now, then they serve as a trail of breadcrumbs for future legislators to do the right thing and to get this right in the future—hopefully, not 15 years down the track, as we’re now doing with property managers, but in a time period far sooner than that, noting that the Minister, in her correspondence with the member in charge, has indicated that she intends to do a fulsome review of this area of the law.

So the Greens will be voting in favour of the two SOPs as put forward by the National Party, we will be voting in favour of the SOP as put forward by the Minister and the Government, and, of course, we will be voting in favour of the two SOPs in my name. Kia ora.

Firstly, can I say to the member, congratulations for getting the bill to this stage. It’s often said that members’ bills are the children of many parents, and this is no exception to that, and in that regard I do want to acknowledge the Hon Nikki Kaye and her work in initially kicking this off. I think this is a great outcome. We’ve been able to work together across the House and come to some solutions, because, as the member Chlöe Swarbrick says, it is actually about getting this across the line.

I’m sure many of us would have liked to have crafted the perfect bill, but I think we’ve got this to a place where we can all agree and have significantly advanced this particular issue. I’m really happy that we’ve been able to do it in such a way that we’ve got broad support across this House.

Can I thank officials for the work they have done on this. It has been complex and difficult and not an area I particularly want to go back and traverse again, because I can tell you there were some technical details within this bill that did keep me awake at night, and then sometimes made me sleep. So thank you very much for your work.

To the select committee, thank you for your examination. It hasn’t been easy. I know that for many of you it touches directly to the heart of your constituencies, and I’m so pleased that we are in the process of progressing this particular bill.

It’s great for us as the Government to have the opportunity to submit our Supplementary Order Paper (SOP) 144. The SOP proposes several things: firstly, to pay all costs for legal costs for unit titles disputes at the Tenancy Tribunal. Tribunals are intended to be an efficient and low-cost means for dispute resolution. The current provisions in the Act may encourage legal costs to be incurred for levy recovery cases where these costs might not be needed. The SOP proposes that a cost scale may be set in regulations, similar to those used in the District Court and the High Court. This would apply to any unit title dispute at the tribunal. Clause 21B of the SOP proposes to insert section 176AAA, which allows regulations to be set a scale for legal costs for unit titles disputes at the Tenancy Tribunal. Clause 16AAA and clause 21AA propose to require the tribunal to use the scale cost regime once regulations are made. The SOP does not set out the scale itself. The scale will be developed in consultation with the sector and provided for in regulations.

The SOP proposes to extend the current protections for service contracts in the Act to signage agreements. Signage agreements set out the terms for a third party to display advertising on a building. The Act requires developers to ensure that service contracts balance the interests of the contractor and the body corporate. Developers may also ensure the contract terms are appropriate for the development. If a developer has not met these requirements, service contracts can be terminated or compensation can be ordered by the tribunal or courts. Some developers enter into long-term signage agreements that benefit the developer. These arrangements can prevent unit owners from receiving the market value of advertising on the building. The SOP proposes amendments to clause 17 and inserts clause 17AAA, which amends sections 139 and 140. These amendments mean the unit owners can apply for compensation for unfair signage agreements or to terminate a harsh or unconscionable signage agreement.

The SOP also proposes to amend Schedule 1, which sets out the transitional provisions for this change. The tribunal or courts will not be able to order compensation for signage agreements entered into before these provisions commence, but the tribunal or courts will be able to terminate the signage agreement if it is harsh or unconscionable.

The SOP proposes clause 11A, to amend section 108. This proposed amendment would prevent matters which require a special resolution under the Act from being delegated to a body corporate committee. Most decisions made by bodies corporate can be made by simple majority. However, the Act requires that some decisions be made by special resolution which requires a 75 percent majority. Currently, a body corporate can delegate a matter requiring special resolution to a body corporate committee. A body corporate committee only requires a 50 percent majority. If a matter needs to meet the 75 percent threshold, it should not be delegated to a subset of owners who decide matters on a 50 percent basis.

The Act allows a body corporate to meter the use of a service to the owner of a principal unit. This allows an owner to pay for the unit’s electricity or water usage, but the provision does not allow the body corporate to charge owners for services provided to accessory units—for example, to garages, carparks, or storage units. A particular issue is that bodies corporate cannot meter electricity used to charge electric cars in carparks or garages. The SOP proposes clause 16AAB, to amend section 125, to remove this legal barrier. The Government supports the uptake of electric vehicles as a low-emissions form of transport, and this amendment will support that goal.

The SOP proposes in clause 21 to amend section 171 to confirm that the Tenancy Tribunal jurisdiction for unit titles disputes is subject to the Limitation Act 2010. This amendment is addressing an apparent gap in the Act. Limitations apply to unit titles disputes heard in the District Court and the High Court. Limitations also apply to other matters heard in the Tenancy Tribunal. The SOP tidies up this issue for unit titles disputes in the Tenancy Tribunal for the avoidance of doubt.

The SOP proposes a number of technical amendments to improve the bill. The most significant change is the redrafting of clauses 18B and 19 which set out where buyer can cancel the contract or delay settlement because disclosure has not met the Act’s requirement. I understand there was concern from some conveyancing professionals that the provisions were confusing. The proposed drafting separates the clauses out into separate provisions—sections 149, 149A, 151, and 151A. This makes it much clearer where provisions relate to pre-contract disclosure and which provisions relate to pre-settlement disclosure. The new drafting also includes simpler language. The SOP proposes some technical amendments to clarify minor points of policy or align drafting with the Act and some transitional provisions.

I do just want to reiterate my thanks to all concerned, particularly the member Nicola Willis for her willingness to work with us on this and allow us to, hopefully, contribute positively to this bill. I thank all those involved, and I commend this to the committee.

Thank you for letting me take a call on this bill. It’s close to my heart because I’m based in Auckland Central, and have watched the environment change. Really, my reason for supporting the adoption of this bill, and its progression, is that I see the apartments that are being built in Auckland Central as, really, key to the solution for affordable housing, which is not only in reach of people but it’s also something which is going to be much more environmentally friendly. We need a city that’s livable and we need the options that people have for affordable housing to be ones that are rock solid investments, because this is the first money that people spend. They spend it because they need security of tenure, and there’s a whole lot of reasons for that. One is that rentals are very difficult and have been very insecure in New Zealand’s culture, and we need to make sure that it becomes much more secure.

The Labour Government has done a lot towards that, but another part of the puzzle, these kinds of structures, bodies corporate—what being involved in this did for me was make me see that there were a whole lot of pieces of the puzzle missing. It is a bit of a can of worms, this stuff, because there aren’t just body corporate structures; there are other forms of community living popping up, often as a consequence of a need for people to live in affordable situations, but also because they desire to live communally, and I think that’s a really important part of things—I think this is a really good way to live if it’s got right, but it’s been insecure and it’s been pretty scary for people going in, because they haven’t had appropriate disclosure of situations, they haven’t known what they’re buying, and they’ve often bitten off more than they can chew.

When I saw this, I was very pleased, and I don’t think it’s an accident that this started with Nikki Kaye, who was based in Auckland Central. I know Grant Robertson was very supportive of it at the beginning of its inception, for the same reasons. He’s another person based in a large city.

I’d like to thank the Minister for allowing the progression of this in so many ways—supporting it with her staff. I know your staff have got their fingers in many pies, trying to reform the area so that there are lots of pieces of that puzzle put together, and this took considerable resource. What we started with, really, was “stone soup”, because we started with our set of proposals, and it was explored, and we’ve ended up with a very different bill, with the cooperation of everybody. It’s really because there’s an evolving culture, because the first reports about this were coming out a decade ago, so this is almost an apolitical move, I think, where we all needed to get on board, and we recognised that and we did. But we ended up with a quite different bill. It involves the development of much more disclosures, and it involves remote voting, which is a major component of the reason that we haven’t gone into the issue of proxies, because that may actually solve the problem.

I suspect what people will do is they will take their role more seriously when they buy an apartment, and they will get involved in a way that perhaps they didn’t in the past, and they won’t be giving their vote as frequently to somebody else in a proxy farming situation, because we’re all becoming much more savvy, and it’s possible under this regime, because you can actually remotely vote. So, hopefully, that means the direct engagement in the situation by people. But, you know, we’ll see; this is an evolving space. There’s a lot of people coming in, particularly to central Auckland, from migrant cultures where there’s been a long tradition of community living. So there’ll be new ways of operating, and, hopefully, that will feed into this, but I certainly see this as a beginning of a real understanding of a broader issue of community living.

The code of conduct is also a really important thing, because we’re starting to understand how we should behave in those spaces, and the other really important piece of the puzzle is dispute resolution, because, as a lawyer, that’s one of my big concerns, just the cost of things and how intimidating they are for people. So that has to be dealt with, and it has been here. There’s been a practical way of looking at that area.

So I thank the member for supporting this, Nicola Willis. I think it’s really great that she took it on. I think it’s great that we’ve managed to cooperatively deal with this piece of legislation, which is so important to people needing an affordable income. Thank you.

Thank you, Mr Chair. I just really want to speak to some of these Supplementary Order Papers (SOPs), and in particular the proxy voting SOPs. To be honest I’m perplexed as to why the members have these SOPs around proxies. The first point I would make is that it undermines the right of a body corporate owner to participate in decision making, because they may well be absentee or for any other reason not be able to participate in the voting process in the way they’d normally like to. But to say you can’t give your proxy to a person you choose and trust is to deny them a vote. So I’m really perplexed by that.

I’m also perplexed that notwithstanding a very, very robust select committee process and good advice that we got from officials, they insist that there is a problem. Now, I’ll tell you that there may be a problem in that some people don’t like the outcome of a body corporate if they’re imposing levies or remediation or whatever, and certainly I’ve seen that firsthand. But that is at the very heart of how a body corporate works—that the collective can decide the direction and not be thwarted by a minority unless there’s a pressure. All of that is already set out in the Unit Titles Act. So I’m really actually confused, and I’m concerned that there’s been pressure brought to bear on these members by small groups of disgruntled unit title holders, and they’ve cast aside the careful consideration of select committees in favour of what are, essentially, lobbyists.

The other thing is that all of the arguments—and I’m really surprised by our not-boomer Green MP saying Zoom and audiovisual or electronic voting doesn’t work, because this Parliament’s shown that it’s a very effective way to participate. What we have now in the amendment is a much updated and upgraded way in which people can vote by being present in person or by audio link or audiovisual link or other remote access facility, or by proxy or by voting electronically—that is to say, by email—at the meeting or in advance of the meeting.

So there is absolutely no reason to suggest there’s going to be this proxy farming out there. The evidence for it is anecdotal at best. The advice of officials is that it’s not a significant problem. Yet what we get is the ability of some people to block the decision making of the widest and broadest number of unit title holders.

Look, there is another SOP I’ll speak to—I want to focus on that as well. But I would invite both members—the drafting of Chlöe Swarbrick’s SOP is missing an “and” or an “or”, but other than that, I still don’t understand exactly the thinking behind it, given the excellent amendments there. Kia ora.

I wasn’t going to take another call, but, of course, the member that’s just resumed his seat has goaded me into it. Frankly, that’s really gutting, Dr Duncan Webb, and hugely disappointing and, frankly, an embarrassing contribution that completely undermines what I thought was a really robust and really sensible—and really mature—discussion throughout the select committee process.

I put forward, in my contribution earlier, exactly why it is the case that we’re progressing with this proxies issue: because it continues to be an issue. I would think that members on the Labour side of the House would reflect on the fact that the member who is progressing the bill also has put forward her own Supplementary Order Paper (SOP)—rather more nuanced than mine, I totally appreciate, but none the less, it remains an outstanding issue.

So if I could just reiterate it, for the sake of Hansard and for anybody who might be listening in at home—those unfortunate people who tune into Parliament TV—legislators can get it wrong. Officials can get it wrong. That is why we continue to work through the process in Parliament to continually update legislation.

Again, if I may, I would like to reiterate the very clear example, the very similar example, of what occurred in 2008, when there was an opportunity to include property managers and real estate agents licensing and professionalisation, and that ended up being something dropped that we’re now picking up 15 years down the track because it was not identified that it was an issue at the time by the officials that were advising Government.

Here, there is a really clear issue that continues to flood my inbox as the local MP for Auckland Central. It also, for the member based in Wellington Central, Nicola Willis, continues to be an issue. And I’d say, for the member in Christchurch Central, Dr Duncan Webb, I’m sure there’s some people who have raised this issue with him.

None the less, when it comes to this issue of minorities, when it comes to this issue of the power imbalance, I made it really clear in my contributions at select committee—and, also, just before in my contribution—there is currently no standard method for contributing to a body corporate meeting online; for doing that via e-methods. We enable it in the legislation, but there is not standardised way to do it. Reflecting even on my own experiences, where I spoke to having a hybrid instance for my body corporate in my apartment, those of us who were contributing and present online were not able to hear those who were in the room. There are teething issues with this. There continues to be issues that we need to address in terms of limitations to access to those proxies.

The other point that I would make is that when we’re talking about access to information—again, this is something which I put forward at select committee in our discussions—those who have the incumbency bias of sitting on the body corporate at present have access to information to be able to email out those who have those unit titles and ask for their proxies to progress the position that they would like to put forward. Those who may hold an opposing view who do not have that incumbency, do not have the opportunity to farm or to solicit those proxy votes. That imbalance of power is something that needs to be addressed, and that is why—myself and the member in charge of this, Nicola Willis, are not saying that you should not be able to pass along your proxy to somebody else. That is not in any of the SOPs. What we’re saying is that there needs to be some form of limitation.

I just ask members, particularly those who are based in central cities around our country, to reflect on some of the concerns that they have heard from their constituents. These are peoples’ very real lives, and peoples’ lives have been ruined through some of the kinds of aggressive corporate-type takeovers that have occurred on some of these bodies corporate. I ask those members to really reflect on the things that they are saying right now, because they will be recorded in perpetuity in Hansard and I guarantee you they will be coming up at election time.

I just want to acknowledge the contribution of the Minister Poto Williams and of member Chlöe Swarbrick, in particular, for their constructive additions to this debate, and to note that I was remiss in not earlier acknowledging Tim Jones, the president of the Body Corporate Chairs’ Group, who has been very helpful in contributing to the further amendments to this bill.

I wanted to quickly respond, both on the issue of body corporate managers raised by the member Chlöe Swarbrick and on the contribution from Dr Duncan Webb. Look, I just want to say it’s disappointing that in the context of such a constructive and collaborative process on this bill that Dr Webb has chosen to reduce himself to criticising the highly engaged member Chlöe Swarbrick for her use of “and” and “or” in the drafting of her Supplementary Order Paper (SOP). I just ask members opposite to reflect a little on the tenor of this debate and what it is that New Zealanders would wish them to be focused on. I’d put to Dr Webb that Chlöe Swarbrick’s engagement with those living in apartments and affected by the misuse of proxy voting is a more substantive contribution to this debate than pernicketing about “ands” and “ors”.

To the substance of the issues raised by Dr Webb in terms of the undermining of rights, look, I do wish to draw him to look at SOP 147, which is quite specific in that it does allow unit title holders to cast a proxy. What it also does is ensures that if they specifically direct how they wish their proxy to be cast, then it doesn’t count towards the limit of proxies. It also ensures that entities can’t demean the democratic process by harvesting proxies in a way that allows non-democratic outcomes to occur. So, look, I stand by that SOP, and I acknowledge Chlöe Swarbrick’s arguments in favour of it.

I just want to deal with the issue of body corporate managers, because I know that this is something that has been raised in good faith by a number of people. There had been originally in the bill a proposal for a requirement for body corporate managers to join an industry association, and this has been removed from the bill subsequent to the select committee process. The reason for that is somewhat practical in that we heard that there were actually very limited options in terms of any industry body that might actually be able to fulfil that role, and therefore the potential for some monopoly effects. We also reflected carefully on the fact that officials advised that the costs associated with joining that industry body would be likely passed quite directly on to unit owners. I acknowledge the balance we need to strike here between ensuring that we have more professionalism in unit title management but also not ensuring it becomes so bureaucratic and costly that it’s a problem.

I just want to highlight that we have an alternative, which is allowing body corporate managers to be subject to code of conduct requirements, and that is what the bill provides. It also provides that body corporate managers can be party to disputes brought to the Tenancy Tribunal on matters relating to the Unit Titles Act. So I’m satisfied that those two provisions in the bill will actually provide a lot of the professionalism that we are seeking to see from body corporate managers in that they’ll require them to disclose conflicts of interest, require them to act in the best interests of the body corporate, and require them to have knowledge of and adherence to the Unit Titles Act. So I respectfully submit that National will not be supporting Chlöe Swarbrick’s SOP in this regard, and can I just acknowledge once again the constructive contributions of many, and I hope that that will continue in this debate.

Thank you, Mr Chair. I stand as a member of the Finance and Expenditure Committee and also as the local member of Parliament for Tukituki. A lot of what has been talked about on bodies corporate has been for those dwellings several stories high where they’re mainly in the cities. But, as we look to the regions, we see that there is a lot of challenge around housing and where to build—not out but up—in our regions, particularly those regions where, like in Hastings, we have productive plains land. Because of that, we don’t want to see our productive plains land being built on, and so we need to look at ways that we can ensure that we are building a lot more condensed housing within our city structures.

It’s also important when talking about the unit titles bill to recognise those submitters who did contribute from the regions like the Frimley Lifestyle Village complex. The Frimley Lifestyle Village complex wanted to make sure that they still had choices when it came to whether they needed to employ a professional to run their body corporate. Now, I think this was a very important change that we made to this bill where we strongly encourage bodies corporate, especially large bodies corporate, to employ a body corporate manager. However, we believe this change would also allow flexibility for bodies corporate to manage their own affairs as they see fit. And it’s those things that can make a big difference when you have people living together, running the bodies corporate together.

I just wanted to talk about the ability to be able to Zoom into meetings. Just because you’re not in the room, as we have learnt through this pandemic, you can Zoom and you can be seen in the room, and we have screens these days just like Zooming in to the House. I would say that bodies corporate, in managing the affairs, the important affairs that they have, are now able—through this change that we’re making through this Supplementary Order Paper (SOP), the Minister’s recommended changes, they can now vote electronically. I think that enables people, even if they can’t be in the room, to be able to vote, to be able to have their say. And that, again, is something that shows how together we’ve worked to make sure we have a better bill, better legislation.

Now, we don’t need in legislation that you can meet via Zoom. I’m pretty sure that you should be able to organise that yourselves in a body corporate. And that’s why I thought when reading the SOP from the Green Party member that I have to agree with my colleague Duncan Webb. I absolutely have to agree with you, Duncan, that we don’t need to be able to—we have the way to vote electronically. And so that’s simple, it’s effective, and don’t forget about Zoom, Chlöe. That way, people can see in the room and out of the room.

Anyway, apart from that, we’ve had a very good contribution from every select committee member in the Finance and Expenditure Committee. I’ve absolutely enjoyed working with everybody and I thank everyone’s contributions. And, again, I thank the Frimley Lifestyle Village for their submission, from Hastings, in the heart of the Tukituki electorate.

Thank you for this opportunity to speak. I wanted to contribute something that was a little bit different from what has been raised before, just to clarify and settle people about the issue over proxies and over some of those concerns that I think are addressed by the explicit focus that has been had in this this bill on conflict of interest issues, so that there’s a much clearer position.

The stories that I heard from constituents were often about people who—in terms of proxy farming—actually had a role in the building and were a dominant personality. What they would do often was they would use that position to bring in someone like their partner to do the maintenance in the building, and they would actually be getting an income from this work, while they would suppress information from people because it suited them—so suppress maintenance of leaky-building issues that needed to happen. Those all now fit well within this legislation in terms of the code of conduct and the conflicts sections, and it’s very, very clearly set out.

That really settled me down about this, because that’s actually the mischief that we are really concerned with—people exploiting those positions, people in conflict, people making money out of these things and dominating others. I really do genuinely believe that there will be a change of culture out there with regard to this. I think this is a very key part—I actually think that conflict of interest is something that, throughout our careers as legislators, we look much more carefully at in lots of areas; it’s a developed area now. And this is the kind of thing that I think stands out in the legislation as a real plus. So, with that, I’ll finish my contribution. Thank you.

Thank you, Madam Chair. Some pretty good debates in the Chamber today. I do actually have some technical questions that I’d like the member to clarify. One of them is in relation to the pre-disclosure requirements. I note the Supplementary Order Paper (SOP) 149 by the member Chris Bishop is moving the following amendments in clause 4—an appropriate alphabetical order of clause 4 is the regulations around including remediation reports prepared by suitably qualified building professional reviews and reports. So, as set out earlier in the debate in the previous stages and also through the select committee, the select committee absolutely understood the reason why a prospective buyer should have the opportunity to access additional information in pre-disclosure requirements. That’s why the select committee recommended in the report-back to bring it back into the bill. And the regulations—I think it’s Schedule 33—sets out the different types of pre-disclosure settlement requirements.

One of my questions that I’d like to ask the member is—I’m just looking at I think it is Part 2, clause 37. I’m actually going through the list. So the pre-contract disclosure settlement, it asks where the body corporate committee has weathertightness issues. Turning the page, it also goes into whether the body corporate is involved in any proceedings, in any court or tribunal. It asks for financial statements and audit reports of the previous three years; notices and minutes of general meetings of the body corporate and the body corporate committee for the previous three years; the name and contact details of the body corporate manager; the 12-month period comprising the current financial year for the purposes of the financial statements of the body corporate; the body corporate levies; details of the maintenance the body corporate proposes to carry out; the balance of every fund, bank account, long-term maintenance plan; and the actual list continues all the way down.

Subclause (2A), again, talks to weathertightness, and then it carries on around regulation 34: any court proceedings initiated by the body corporate. I’d just like to ask the member—and it’s good to see officials on the bench there—is this just a pick-up from the previous Act and put straight into the new Act, so the previous regulations or regulation I think is Schedule 33? And then just a couple of other questions around that. What would entail a suitably qualified building professional? What sort of industry? I mean, do they have to be a certified builder, a master builder? Are there particular criteria that would meet that sort of definition? And the other question that I’d like to ask is—looking at the schedule, I went through the list and there’s quite a few things that are needed in there, both financial and to the actual state of the building. What other type of defects? Because we do have weathertightness, which I think would be a really important issue. Earthquake-prone, the financial statements—what is the mischief that that particular SOP is trying to address around remediation reports? So I’d just like to hear from the member what sorts of examples that a remediation report would bring to the surface for a person who was looking at the pre-disclosure. Thank you.

Thank you, Madam Chair. I’m going to turn to those questions from the member shortly. I just want to first do something which I didn’t do earlier which is really important, and that is to acknowledge Nikki Kaye. She was the member for Auckland Central who brought this legislation into being, and I am really the adopting mother of it, and I want to acknowledge her.

Look, the member has asked two or three questions, the first in relation to the Supplementary Order Paper (SOP) about remediation reports. Look, can I just be clear that what a remediation report is is a report that has been delivered by a building professional to a unit title building that has investigated defects within that development, and that then is the report on what they’ve found about those defects and potentially what remediation would be required to address them.

Now, reading the bill as it currently stands and as the SOP put forward by the Minister would have it, some will read that to say, well, that should include remediation reports that would be included in the definition. But there is some ambiguity there, and I have been persuaded by the submissions of those involved with bodies corporate who have said, “Let’s just make it crystal clear that if a remediation report has been furnished in any way, that would, as of right, be included in the pre-disclosure requirements.” So that is why that is there.

Look, the other questions that the member has asked about how the section of the bill put together on what should be there for pre-disclosure purposes—the balance that has been attempted to strike there is to be prescriptive so as not to require bodies corporate to go on extensive document collection exercises. I was quite convinced, as I’m sure other members were at the select committee, by those who came and said, “Look, you can’t make this such a cover-all that the effect is that the record keeping required for bodies corporate becomes incredibly onerous and that also down the track they could face litigation because page 4 of a submission wasn’t included.” So, by providing some specificity in the bill, what we allow for is for bodies corporate to have clear direction about the sort of documents that should be provided in the pre-disclosure process, and that is the way that that section of the bill has been put together.

Thank you to the member, again, for answering a number of those questions. So, just to clarify, the lists that we have within that schedule that was provided, again, is that a reflection of what was in the previous regulations? Is that just an uplift and then a put in?

Again, I thank the member for—my concerns are around just the compliance costs for the pre-disclosure. But if the member can confirm from officials that in fact it has been just uplifted from the previous Act and put back into this bill, that would be good to know because obviously with the Unit Titles Act being about a decade old, the industry as well as bodies corporate will be quite used to what was done before. So, therefore, we’re just taking it back to the status quo. So if the member could just clarify if that’s the case. Thank you.

I thank the member for her questions. So to be crystal clear: that part of the bill is new. The reason it is there is because one of the things the bill sets out to do is to be much clearer and more deliberate about pre-disclosure requirements, and that’s why that new section has been put in rather than being picked up from existing legislation.

The second question that the member asked previously was around the definition of a “suitably qualified building professional”. I just want to acknowledge that that phrase is also used in other parts of the bill, particularly the long-term plan part of the bill, and to acknowledge that that is quite a wide phrase, and that is intentional. Because the balance we’re trying to strike here is to acknowledge that there are a broad range of potential professionals who could put forward remediation reports or professional opinions on building quality: engineers, architects, seismic specialists. There are a range of professions, and what we didn’t want to do was to create a definition so narrow that it would, therefore, exclude input from professionals who were suited to that task.

Kia ora, Madam Chair. I just want to speak briefly to Supplementary Order Paper (SOP) 142—it’s Chlöe Swarbrick’s SOP—and just explain why I think it’s a little problematic. Now, again, this was an issue that was addressed in committee, and this is relating to body corporate managers being compulsory members of industry organisations. I guess there’s always a reluctance to make people belong to an organisation. Obviously, it’s important in some areas, and a professional organisation and professional body can be a really important part of the regulatory framework.

There’s, essentially, two reasons, I think. Firstly, you’ve got to show a real need and no feasible alternative, and that was addressed in the bill by imposing a compulsory code of conduct in the bill, and I think that does go a long way. The other problem was that whilst there are industry organisations out there, there’s always a risk of, essentially, endorsing one industry organisation or one or two industry organisations over others. The industry organisations that are out there really weren’t seen to be quite capable—whilst they’re advocacy organisations, they weren’t quite up to scratch, if you like, for stepping up to becoming what was, effectively, a regulatory body.

Of course, this SOP requires members of an industry organisation to abide by a code of conduct, and that also would become duplicative, because we now have a code of conduct in the Act as well. Of course, if you’ve got multiple organisations, you’d then have multiple codes of conduct—two, three, four—and whilst they might have some similarities, we don’t see that as a useful step.

So, whilst the kind of professionalisation of body corporate managers may be something that happens down the road—and it may be that a kind of professional regulatory body that sits outside of Government but is endorsed by it does happen—we didn’t think we were there yet, so that’s why this SOP won’t be supported.

I move, That the question be now put.

Motion agreed to.

The question is that the Hon Poto Williams’ amendments set out on Supplementary Order Paper 144 be agreed to.

Amendments agreed to.

The question is t

The question is that Chlöe Swarbrick’s amendment to insert new clause 9A set out on Supplementary Order Paper 141 be agreed to.

The question is that Chris Bishop’s amendment to insert new clause 9B set out on Supplementary Order Paper 147 be agreed to.

The question is that Chlöe Swarbrick’s amendment to clause 35 set out on Supplementary Order Paper 142 be agreed to.